Capital suggestion

$60 billion

Opinion

Did you know that the government of Pakistan buys goods and services worth around $60 billion, or Rs7.5 trillion, a year every year? What this means is that the government of Pakistan buys goods and services worth Rs250,000 a year every year on behalf of each and every Pakistani family.

Yes, there is a Public Procurement Regulatory Framework. Yes, there are Public Procurement Rules 2004. Yes, there is a Public Procurement Regulatory Authority or PPRA. But estimates of ‘wastage’ in this $60 billion a year ‘business’ wary from a low of 30 percent to a high of 60 percent. And that ‘wastage’ amounts to a low of $18 billion a year to a high of $36 billion a year.

For the record, we have had 21 IMF bailout packages since 1950. For the record, Mohammad Khalid Javed was the founding managing director of the PPRA. In 2010, Khalid Javed said, “We do not need any borrowings from the World Bank or the IMF if we can save this money……”

The $18 billion to $36 billion a year ‘wastage’ represents four things: collusive behaviour, bid rigging, substandard procurement and over-valuation. The $18 billion to $36 billion a year ‘wastage’ comprises three things: corruption, fraud and abuse. The $18 billion to $36 billion a year ‘wastage’ is the result of three things: lack of transparency at all stages of the procurement process, lack of competition and gross inefficiencies.

The $18 billion to $36 billion a year ‘wastage’ has a lot to do with bid rigging – when ‘bidders agree among themselves to eliminate competition in the procurement process……so that prices are higher and the government pays more…..’ The $18 billion to $36 billion a year ‘wastage’ represents a combination of three things: quantity increase, quality down and/or prices up. The $18 billion to $36 billion a year ‘wastage’ comprises ‘procurement deficiencies, deviations or inappropriate use’.

According to experts, the ‘internal environment of the public procurement regime in Pakistan is related to three factors: people who make procurement decisions, processes which provide guidance to practitioners, and controls which ensure probity, transparency and accountability’.

Prime Minister Imran Khan must decide if it is going to be ‘business as usual’ or not. ‘Business as usual’ would mean that we will continue wasting $18 billion to $36 billion a year. Yes, the internal environment of the public procurement regime is disorderly and ‘corruption in such a disordered environment is unavoidable’. All that is needed is a ‘small, professionally staffed, independent regulatory agency’. All that is needed is ‘transparency and accountability in public procurement’.

Taking loans from China means ‘business as usual’. Taking loans from the IMF means ‘business as usual’. Taking loans from Saudi Arabia means ‘business as usual’. Looking for help from outside of Pakistan means ‘business as usual’. Expecting CPEC will change Pakistan means ‘business as usual’. Diaspora bonds are not a solution to our problems.

We need to reform and we need to restructure. No more ‘business as usual’. Imagine, restructuring public procurement could yield a dividend of Rs3 trillion a year every year (remember, net revenue receipts for 2018-19 have been estimated at Rs3.07 trillion).

Did you know that the government of Pakistan buys goods and services worth around $60 billion, or Rs7.5 trillion, a year every year? What this means is that the government of Pakistan buys goods and services worth Rs250,000 a year every year on behalf of each and every Pakistani family.

Yes, there is a Public Procurement Regulatory Framework. Yes, there are Public Procurement Rules 2004. Yes, there is a Public Procurement Regulatory Authority or PPRA. But estimates of ‘wastage’ in this $60 billion a year ‘business’ wary from a low of 30 percent to a high of 60 percent. And that ‘wastage’ amounts to a low of $18 billion a year to a high of $36 billion a year.

For the record, we have had 21 IMF bailout packages since 1950. For the record, Mohammad Khalid Javed was the founding managing director of the PPRA. In 2010, Khalid Javed said, “We do not need any borrowings from the World Bank or the IMF if we can save this money……”

The $18 billion to $36 billion a year ‘wastage’ represents four things: collusive behaviour, bid rigging, substandard procurement and over-valuation. The $18 billion to $36 billion a year ‘wastage’ comprises three things: corruption, fraud and abuse. The $18 billion to $36 billion a year ‘wastage’ is the result of three things: lack of transparency at all stages of the procurement process, lack of competition and gross inefficiencies.

The $18 billion to $36 billion a year ‘wastage’ has a lot to do with bid rigging – when ‘bidders agree among themselves to eliminate competition in the procurement process……so that prices are higher and the government pays more…..’ The $18 billion to $36 billion a year ‘wastage’ represents a combination of three things: quantity increase, quality down and/or prices up. The $18 billion to $36 billion a year ‘wastage’ comprises ‘procurement deficiencies, deviations or inappropriate use’.

According to experts, the ‘internal environment of the public procurement regime in Pakistan is related to three factors: people who make procurement decisions, processes which provide guidance to practitioners, and controls which ensure probity, transparency and accountability’.

Prime Minister Imran Khan must decide if it is going to be ‘business as usual’ or not. ‘Business as usual’ would mean that we will continue wasting $18 billion to $36 billion a year. Yes, the internal environment of the public procurement regime is disorderly and ‘corruption in such a disordered environment is unavoidable’. All that is needed is a ‘small, professionally staffed, independent regulatory agency’. All that is needed is ‘transparency and accountability in public procurement’.

Taking loans from China means ‘business as usual’. Taking loans from the IMF means ‘business as usual’. Taking loans from Saudi Arabia means ‘business as usual’. Looking for help from outside of Pakistan means ‘business as usual’. Expecting CPEC will change Pakistan means ‘business as usual’. Diaspora bonds are not a solution to our problems.

We need to reform and we need to restructure. No more ‘business as usual’. Imagine, restructuring public procurement could yield a dividend of Rs3 trillion a year every year (remember, net revenue receipts for 2018-19 have been estimated at Rs3.07 trillion).